Note to posters:

Panic posted a similar question once before, He stated his income is half what it used to be and that his panic stems from having gotten a divorce.

According to Anne M, that is 2 of the 3 M's for hardship... but without both mortgage company willing to help, he is asking what the next step is.

Note to Liz Steele. Panic said nothing about two houses: He is describing two loans on one house.

Note to Bill Polack: Panics Combined loan to value is 154%. How is even a 125% LTV refi is going to cover that. - Are you saying that Fannie and Freddie will allow re-subordination of a second behind a refinance? I did not know that FHA lenders are not restricted by HVCC from attempting to influence appraisal valuations. Are you sure about that?

Note to Panic Soon: You will get armloads of advice, Most of it good, But even the good advice is not effective in most situations.

My advice is simply that you might run into several brick walls and a few wild goose chases trying to resolve your crisis. Through the ordeal, keep your spirits up. Remember that the current response by financial organizations to the problem of large numbers of distressed homeowners is still somewhat band aid and ad hoc. Once in a while, someone gets a loan mod or a successful short sale through. There are some rare success stories. I join the other posters in hoping that you become one of those success stories.

Hi Panic Soon, as some have suggested below you may want to see if you are eligible for a refinance via the Making Home Affordable Program. Who are you making your loan payments to? Is the first insured by Fannie Mae or Freddie Mac? Here is a tool to start with: http://makinghomeaffordable.gov/loan_lookup.html

Feel free to follow up w/ any questions. If your loan was originally held by Countrywide and now Bank of America I can look up directly for you. Thanks,

Here's an idea: Sit tight. Your rate's not that bad. The second won't be able to be included in the payoff. If anything else, refinance into an ARM (5 or 7 year) thru Freddie or Fannie's program (allowed up to 125% loan to value). The points are going to be high (about 1 to 2 points). Is it worth it? Maybe. If the difference in payment is equal to your second mortgage payment, maybe that'll stave off some debt issues until your house value comes back around. You may also want to look into FHA. The appraiser can be contacted by the lender to obtain a better value. Conventional appraisers cannot be contacted by the lender and the value is what they put down without putting extra work into it.

Dear Panic Soon,

You and about 500,000 other people are in the same boat. I know, that doesn't help.... Depending on the mortgage company, they may or may not accept a short sale if you are current. Most all lenders will tell you to stop paying your mortgage for 90 days if you want a loan modification. DON"T STOP PAYING if you still can. Short Sales will take about 3 months to get approval on, and, if the buyer is still around (MOST buyers will find something else or lose their qualification status during the 3 months) another 30-45 days to get the buyer's loan approved and home closed.

Several factors come into play on Short Sales...SELLER must qualify, BUYER must qualify and your home has to appraise on BOTH sides. I have been very successful in getting my clients out of their turmoil.

If you just need someone to talk to with NO OBLIGATION, please call me at Coldwell Banker, here in Yuba City, at 530-701-6674. Please visit the website below for more information on loan mods and short sales.

Thank you,
Scott Thiel

If you are interested in a loan modification, give me a call. I work with a local loan officer that is doing loan modifications. Here is my information 530-218-4328. Erika Johannsen.

There are about 7 critical questions that you need to answer to be able to determine whether you would qualify for either loan modifications or a short sale. Chief among them are the issues of:
1. Is there a hardship? Hardships are typically classified as "the 3 M's": Money, Marriage and Medical. If you have a hardship, it helps you qualify for a short sale (where the lenders agree to forgive a certain amount of your loans and let you sell the property) but it hurts your ability to qualify for a loan modification (because you can less afford to pay back the money).
Translation: Money: If money has become a problem due to job loss, income reduction or the like, you may qualify as having a hardship
Marriage: You have gone through some sort of a change in your marital status (such as a divorce or a death) which has caused a decrease in your ability to pay your debts.
Medical: You have suffered a large medical expense. If this is a one-time event, you may still qualify for a loan modification as well as for a short sale.
2. Lenders: Which lenders are involved and are your two lienholders the same bank (this can help). There is a tremendous variability in banks' willingness to and functional capability to do either a loan modification or a short sale. Suffice it to say that they are overwhelmed and understaffed (and undertrained) to handle the volume of loan modifications and short sale requests they are getting.
Hope this helps. Let me know if you need a referral to an experienced real estate agent in your area. I'd be happy to find a few qualified agents.
Good luck!

It seems as though you are on the brink of making some kind of decision.
Since there are 2 homes I can assume that one is an investment property or a family property (brother, mother, sister, vacation home, ect). Depending on what you feel is going on the chance that the market turns around are 50-50.
Meaning that property values go up later or they don’t.
When that comes to pass you can decide what you want to do then.
Unless you have had a recent appraisal you do not really know what your property is worth today.
I am sure you have heard answers that you might not agree with.
Do you want to sell one of the properties?
Have you Refinanced already?
These are the missing answers.
As a RESPC (See Profile) I would be happy to try to answer any direct questions you may have to the best of my ability.

Liz Steele
Financial Specialist/RESPC
Hawthorne Capital Corp.
Phone: (212) 231-0062 Ext. 5183
Cell: (347) 819-5682
Email:
To: LizSteeleSP@gmail.com
Cc: info@hccbank.com

Hello!
I guess my first question would be...why are you panicking? Have you lost your job, taken a pay cut or had any other life changing even that makes your mortgage payment no longer affordable? If so, you may be able to talk to your lender about a loan modification which will temporarily reduce the amount of your monthly payment so you can stay in your home.

Unfortunately, just because your home has lost value does not mean that a refi is possible.

I hope you are one of the many homeowner's that is still employed and can still afford your mortgage payment. Sure, you have to live with the dissatisfying fact that your home is currently worth less than you owe. But at least the interest on your mortgage payment and your property taxes are tax deductible. Rent is not tax deductible.

Best Wishes,
Julie Thall
jthall@rpm-mtg.com